Financialization

Financialization From Wikipedia, the free encyclopedia Jump to: navigation, search This article may require cleanup to meet Wikipedia's quality standards. Please improve this article if you can. (November 2007) Financialization is a term sometimes used in discussions of a form of capitalism which developed over several decades leading up to the 2007- 2008 financial crisis, and in which financial leverage and exotic financial instruments tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy. Contents [hide] • 1 Specific academic approaches • 2 Roots • 3 Foreign exchange trading • 4 Financial turnover compared to gross domestic product • 5 Futures markets • 6 Effects of financialization on the economy o 6.1 Criticism of financialization • 7 The development of leverage and of financial derivatives • 8 References • 9 External links [edit] Specific academic approaches Actually, various definitions, focusing on specific aspects and interpretations, have been used: • Greta Krippner of the University of California, Los Angeles has written that financialization refers to a “pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production.” In the introduction to the 2006 book Financialization and the World Economy, editor Gerald A. Epstein wrote that some scholars have insisted on a much more narrow use of the term: the ascendancy of "shareholder value" as a mode of corporate governance; or the growing 1